Vermont Business Magazine VSECU, a statewide credit union based in Montpelier, today released new data detailing 2015 holiday spending trends amongst Vermonters, finding that Vermont consumers were more likely to finance holiday spending with cash than with credit. VSECU’s analysis showed that 2015 holiday spending via cash and debit increased compared to 2014, while credit card spending decreased by 8.8 percent. Analyzing more than 5.6 million anonymized account transactions in 2015, VSECU also found that both number of purchases and average monthly spending increased in the months of November and December, compared to all other months. However, the majority of those spending increases were financed with consumers’ cash on hand, rather than amassing greater debt on credit cards. Average monthly debit spending increased nearly 10 percent in November and December, while average credit card spending rose only 5.9 percent for those same months.
“At VSECU we’re always working to help members and Vermont communities improve financial literacy, from debt management to proper budgeting, so we’re glad to see a decline in holiday debt this year,” said Yvonne Garand, Senior Vice President Marketing & Business Development for VSECU. “But with holiday gifting, charitable giving, college tuition, and property taxes, the end of the year continues to pose a significant budgeting challenge for most consumers.”
Though credit card spending was down this year, paying off any end-of-the-year debt is a critical step for financial health, and VSECU is offering the following tips to help Vermonters manage debt in the new year.
Assess the damage – Determine your collective debt across credit cards and what you can afford to pay on a monthly basis. Personal finance calculators are available online, including one from VSECU, and can help you determine how long it will take to pay off your balance.
Develop a plan – It’s always easier to accomplish goals when you have a plan in place, and written plans are even more effective. Write down a list of actions you can take to pay down your debt, from payment schedules to enlisting a professional financial planner, and reference the plan frequently.
Set milestones – Set milestones to help you achieve your goals, and think positively, believing you can achieve those goals. When you achieve a goal, recognize your accomplishment and set a new one. With every achievement, you will feel more and more confident, which will give you energy to continue.
Pay off your balance before your savings account – Regularly adding to your savings account is financially smart, but if you’re carrying credit card debt, paying that off before putting money into a savings account often results in higher savings. Current interest rates on savings are typically less than 1 percent, compared to the average variable credit card rate of 15 percent. By paying off your credit card balance, you are essentially earning a 15x greater return on your money.
Learn and adapt – As your 2015 holiday debt dwindles, acknowledge the holiday spending habits that put you in debt and how you can plan for 2016. Using credit can cause you to overspend and result in costly interest charges. By saving for holiday expenditures throughout the year, you will have the funds available to you and can avoid credit card spending over the holidays. This approach will start you off on strong financial footing for 2017.
For more budgeting strategies and financial tips, visit the VSECU Blog at http://blog.vsecu.com/.
MONTPELIER, VT, JANUARY 13, 2016 – VSECU